Assume that the managers of Fort Winston Hospital are setting the price on a new

Question

Assume that the managers of Fort Winston Hospital are setting the price on a new outpatient service. Here are relevant data estimates:
Variable cost per visit $ 5.00
Annual direct fixed costs $500,000
Annual overhead allocation $ 50,000
Expected annual utilization 10,000
a. What per-visit price must be set for the service to break even? To earn an annual profit of $100,000?
b. Repeat Part a, but assume that the variable cost per visit is $10.
c. Return to the data given in the problem. Again repeat Part a, but
assume that direct fixed costs are $1,000,000.
d. Repeat Part a assuming both $10 in variable cost and $1,000,000 in direct fixed costs.

Explanation / Answer

a. 10000*X + 10000*5 – 500000 – 50000 = 100000 Solving for X = 60 answer b. 10000*X + 10000*10 – 500000 – 50000 = 100000 Solving for X = 55 answer c. 10000*X + 10000*5 – 1000000 – 50000 = 100000 Solving for X = 110 answer d. 10000*X + 10000*10 – 1000000 – 50000 = 100000 Solving for X = 105 answer happy to help

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.